India-EU FTA Allows European Carmakers To Export 1.6 Lakh Cars Annually At Lower Duties

The India-European Union free trade agreement (FTA) will provide European automobile manufacturers with a phased tariff advantage for vehicle exports to India.

Under the proposed pact, EU-origin passenger vehicles will be eligible for concessional import duties, with the annual quota increasing gradually over time, PTI reported.

The agreement allows European carmakers to initially ship up to 1 lakh passenger vehicles every year under a tariff-rate quota (TRQ). This limit will rise steadily and reach 1.6 lakh vehicles annually from the 10th year of implementation.

Duty cuts planned across vehicle segments

The concessions will apply to internal combustion engine (ICE) and hybrid electric vehicles (HEVs) manufactured in the EU. However, benefits will only be available for vehicles priced above Euro 15,000, while lower-priced cars will not receive tariff concessions.

For vehicles priced between Euro 15,000 and Euro 35,000, the import duty will decline from the existing 110% level to 35% in the first year and further reduce to 10% by the fifth year.

For cars priced above Euro 35,000, duties will fall from 66% to 30% initially before reaching 10% over the same period.

The quota will include separate categories based on vehicle prices, with 43,000 units reserved for cars priced above Euro 50,000 from the fifth year.

Electric vehicle imports get phased access

The agreement also includes provisions for completely knocked-down (CKD) vehicles. The quota for ICE and hybrid CKD vehicles will begin at 75,000 units annually for the first five years before gradually declining to 50,000 units from the 10th year.

Battery electric vehicles (BEVs), plug-in hybrids and other technologies will receive concessions from the fifth year onwards. These benefits will apply to vehicles priced above Euro 20,000.

The CBU quota for such vehicles will start at 20,000 units in the fifth year, rise to 50,000 units by the 10th year and eventually reach 90,000 units annually from the 14th year.

The proposed tariff structure is expected to provide European automakers greater access to India’s growing passenger vehicle market while offering consumers more international vehicle options.